Property Market Insights May 2024

It’s crucial to stay on top of the rapidly changing property industry if you want to maximise the success of your investment or development journey. In?May’s Industry News update we’ll be taking an in-depth look at April’s House Price Index, as well as all of the key facts and figures from the rental market that could impact your decisions and strategies.

Here are the some of the?things you should be aware of if you’re considering expanding your portfolio:

The House Price Index

The most recent House Price Index, published on 29th April, highlights that the market is currently sitting in a relatively stable position. House prices are continuing to fall slightly over the UK as a whole, dropping by 0.2% in the year up to March 2024. Broken down to UK regions, this figure ranges from a rise in house prices of 4.4% in Northern Ireland to a fall of 1.7% in the East of England. Looking specifically at Yorkshire and the Humber, the area has seen a rise of 0.8%. Despite these changes, the property market is currently sitting in a more balanced position than it has since before the pandemic.

Mortgage approval rates are also reported to have reached pre-pandemic levels, showing a staggering 32% more approvals in February 2024 compared to February 2023. But mortgage rates themselves are still significantly higher, with the average rate for a 5 year fixed mortgage continuing to sit at 4.5%, where it is predicted to stay for the rest of 2024. This stability is bringing more confidence and activity to the market, with Zoopla’s Executive Director saying he expects 100,000 more people to move home throughout 2024 compared to 2023, making 2024 an excellent time to consider expanding your portfolio.

Rental Price Changes

Throughout the UK as a whole, average rental prices have increased by 7.2% in the last year, adding an estimate of ￡960 to the average household’s annual bill. However, this rate of inflation is lower than we have observed throughout the last 2 years, highlighting that the market is continuing to improve from the perspective of both buyers and sellers. The rate for Yorkshire and the Humber specifically sits just below the national average at 7.1%.

There are two key?factors influencing this change:

• The misalignment of supply and demand of rental properties has had a prominent effect on the rental market throughout the UK for the last 3 years, with a number of tenants choosing to remain renting rather than buying due to high mortgage rates, or moving to smaller rental properties in more affordable areas due to rising rent costs.?
• Landlords not increasing rents for several years, in fact many for a decade or more, and then becoming unstuck when the interest rates have increased. In turn this has had a ripple effect and the landlords have had to pass the increase on to the tenants by increasing rents.

The property market continues to prove profitable for investors and developers, particularly those looking to acquire properties in lower cost rental areas.

High Rental Yields

Rental yields are continuing to rise, and they’re rising even faster than house prices. The current rate across the UK as a whole is 5.6%, but breaking this down by city shows highs of 8.96% and 8.03% in Sunderland and Aberdeen respectively.

In Yorkshire and the Humber, the current rental yield rate is an average of 6.38%, significantly above the nation as a whole. Looking at specific cities in the region shows Hull at 7.45%, Grimsby at 7.16%, Bradford at 7.02%, Leeds at 6.67%,?Wakefield at 6.56% and York at 5.22%. These figures highlight that the Yorkshire and the Humber area is a great choice for investors or developers looking to secure property that will bring a good return on their investment.

Final Words

The property market is continuing to lean towards its pre-pandemic state, however the main influential factors at the moment are high mortgage rates and the imbalance of supply and demand when it comes to rental properties. This can prove fruitful for investors, as more renters are looking for houses in lower cost areas, some of which are showcasing very promising rental yield rates. As always, it’s crucial to remain aware of market trends and to act strategically in order to ensure long-term returns on your investments.